Financial Results for the Second Quarter Ended April 30, 2014
[Japan GAAP] (Consolidated)
Date:

June 4, 2014

Company Name and Code:

Tomoe Engineering Co., Ltd. and Subsidiaries - 6309
(Website: http://www.tomo-e.co.jp/index_e.html)

Stock Exchange Listing:

1st Section, Tokyo Stock Exchange

Head Office:2-2, Osaki 1-chome, Shinagawa-ku, Tokyo, Japan

President:

Noboru Shiono

Investor Relations Contacts:

Mitsuo Matsumoto, Director, Accounting and Management Planning Tel: (03) 5435-6512

Date to report Consolidated Quarterly Financial Statement: June 12, 2014
Date for Dividend Payment:

July 7, 2014

Preparation of Supplementary Explanatory Materials for Quarterly Operating Results: Yes
Briefing Session for Quarterly Operating Results: Yes (for institutional investors)* Any fractional sums less than one million (or one thousand) yen are disregarded.
1. Consolidated Financial Data for the Second Quarter Ended April 30, 2014
(1) Results of Operation (Consolidated)

Quarter Ended April 30, 2014
Quarter Ended April 30, 2013

(Percent: Change from the same quarter of the previous year)
Net Sales
Operating Income
Ordinary Income
Millions ofMillions ofMillions of
Yen
Percent
Yen
Percent
Yen
Percent
19,957
3.0
846
-15.2
1,024
-4.8
19,370
-8.4
998
-29.7
1,075
-28.8
Net Income

Quarter Ended April 30, 2014
Quarter Ended April 30, 2013

Millions of
Yen
774
631

Percent
22.6-37.7

Net Income per Share

Fully Diluted Quarterly
Net Income per Share

Yen
77.61
63.30

Yen
-

(Note) Comprehensive income
Second Quarter ended April 30, 2014: 838 million yen (-24.2%) Second Quarter ended April 30, 2013: 1,107 million yen (-3.2%)(2) Financial Condition (Consolidated)

Quarter Ended April 30, 2014
Year Ended October 31, 2013

Total Assets (A)(Millions of Yen)
33,19633,477

Net Assets (B)(Millions of Yen)
23,74023,575Net Assets Ratio(B) / (A) (Percent)
71.5
69.8

(Reference) Net assets
Second Quarter ended April 30, 2014: 23,740 million yen

Year Ended October 31, 2013: 23,353 million yen

2. Dividend Status(Record Date)
Year Ended October 31, 2013
Year Ending October 31, 2014
Year Ending October 31, 2014 (Prospect)First
Quarter-Interim
Term
0.00
22.50

Annual Dividend (Yen)Third
End ofQuarter
Fiscal Year
45.00

(Note) Revisions since the most recently released dividend projection: None

-

22.50

Annual45.00
45.00

3. Forecast for Earnings for the Year Ending October 31, 2014 (Consolidated)(Percent: change from the previous year for full business year)
Net Sales
Operating Income
Ordinary Income(Millions of Yen) (Percent) (Millions of Yen) (Percent) (Millions of Yen) (Percent)
Full Business Year
41,300
8.2
1,930
27.3
2,050
22.0
Net Income
Net Income per Share(Millions of Yen) (Percent)
Yen
Full Business Year
1,200
42.7
120.26(Note) Revisions since the most recently released dividend projection: None
* Others(1) Significant changes in subsidiaries during this quarter (Changes in specific subsidiaries in conjunction with a change
in the scope of consolidation): None
Number of new subsidiaries: __(Company names):

Number of eliminated subsidiaries: __(Company names):(2) Adoption of simplified accounting method and the specific accounting method: None
(3) Changes of the principles, procedures, and representation of the accounting policies
1) Change due to revision of accounting standard: None
2) Other changes than the above 1): None
3) Change in accounting estimates: None
4) Retrospective restatements: None
(4) Number of outstanding shares (Ordinary shares)
1) Number of outstanding shares as of quarter-end and year-end (including treasury stocks)
At April 30, 2014: 10,533,200 shares

At October 31, 2013: 10,533,200 shares

2) Number of treasury stocks as of quarter-end and year-end
At April 30, 2014: 554,667 shares

At October 31, 2013: 554,592 shares

3) Number of average shares (accumulated quarterly total)
At April 30, 2014: 9,978,599 shares

At April 30, 2013: 9,978,617 shares*Disclosure concerning status of implementation of quarterly review procedure
This quarterly earnings report is exempt from the quarterly review procedure based on the Financial Instruments andExchange Act. At the time of disclosure of this quarterly earnings report, the Company has not completed a quarterly
review procedure based on the Financial Instruments and Exchange Act.
*Explanations for appropriate use of the earnings forecast and other special instructions
The forward-looking statements such as a forecast of our financial results described herein are based on theinformation currently available to us and certain assumptions that we believe are reasonable. Actual results could differ
materially due to various factors. Please refer to the Financial Results for the Quarter (Attachments) on page 3, (3)[Qualitative Information on Consolidated Earnings Forecast] of 1. [Qualitative Information on Quarterly Consolidated
Operating Results] for the operating results forecast and matters to note when using forward-looking statements.

Table of Contents (Attachments)
1. Qualitative Information on Quarterly Consolidated Operating Results...................................................................2(1) Qualitative Information on Consolidated Operating Results....................................................................... 2(2) Qualitative Information on Consolidated Financial Position....................................................................... 3(3) Qualitative Information on Consolidated Earnings Forecast....................................................................... 3
2. Matters Concerning Summary Information (Other)................................................................................................. 4(1) Changes to material subsidiaries during the quarterly consolidated period under review......................... 4(2) Application of special accounting method in the preparation of quarterly consolidated financial
statements........................................................................................................................................................ 4(3) Changes in accounting principles, changes in accounting estimates and retrospective restatements... 4
3. Consolidated Financial Statement......................................................................................................................... 5(1) Consolidated Quarterly Balance Sheet. ..................................................................................................... 5(2) Consolidated Quarterly Statements of Income & Consolidated Quarterly Statements of Comprehensive
Income.............................................................................................................................................................. 7(3) Consolidated Quarterly Statements of Cash Flows. .................................................................................. 9(4) Note on Going Concern Assumption.......................................................................................................... 11(5) Segment Information, etc. ............................................................................................................................ 11(6) Notes for Significant Changes in Shareholder’s Equity...............................................................................11
4. Overseas Net Sales (Supplemental Information)...................................................................................................121

1. Qualitative Information on Quarterly Consolidated Operating Results(1) Qualitative Information on Consolidated Operating Results[General operating results]
During the second quarter under review, Japan’s economy maintained its gradual recovery trend spurred by avariety of factors and the government’s economic and monetary policies, including improved corporate performanceand a recovery in personal consumption despite a decline following rush demand associated with the consumption tax
hike. Overseas, even as the U.S. economy showed signs of a recovery, as the economic recovery in Europe
appeared to be pausing, and as the economic growth of China and other newly developing countries slowed down, thefuture remained shrouded by opaque conditions.
Given these circumstances, in the Machinery & Equipment Business domestic net sales of machinery rose, butdomestic net sales of components and repair services for the public sector were off, and overseas net sales ofmachinery, components and repair services for the private sector declined. In the Chemical Products Business, net
sales in the domestic plastics sector were lackluster but net sales in the domestic fine chemicals, advanced materials
and industrial materials sectors, all remained strong. In terms of earnings during the period, while profits were lower inthe Machinery & Equipment Business, earnings in the Chemical Products Business increased, primarily reflecting thehigher sales. The Tomoe Engineering Group also reported extraordinary income as a result of dividends received
from unconsolidated subsidiaries and the acquisition of a minority interest pertaining to the resin plastic compounding
business acquired 100% ownership in Shenzhen, China.
As a result of the above, net sales for the Tomoe Engineering Group for the consolidated second quarter rose 3.0%
from the same period last year to 19,957 million yen. Operating income was 846 million yen, 15.2% down from thesame period of the prior year, ordinary income was 1,024 million yen, 4.8% down from the same period of the prior year,
and net income was 774 million yen, 22.6% up from the same period one year earlier.
[Operating results by segment](Machinery & Equipment Business)
In the Machinery & Equipment Business, consolidated net sales for the year-to-date period were 5,034 million yen,
8.3% down from the same period last year. Net sales of machinery for domestic public sector demand remained
steady, but net sales of machinery for domestic public sector demand, components and repair services in overseas
markets, and machinery in North America, all decreased.
From an earnings aspect, because of the decline in net sales of all of the Tomoe Engineering Group’s businesses,
and the reporting of projects with lower profitability on net sales of machinery, components and repair services foroverseas markets compared with the year-ago period, the operating loss was 299 million yen, 52.5% down from thesame period one year ago.
(Chemical Products Business)
In the Chemical Products Business, sales in the plastics sector of commodity plastics including imported wooddecreased. On the other hand, sales of UV curing resin in the fine chemicals sector, sales in the advanced materials
sector of ceramic for use in semiconductor manufacturing, sales in the industrial materials sector for housing andconstruction applications were brisk. As a result, consolidated net sales for the quarter were 14,923 million yen, 7.5%
up from the same period one year ago.
With respect to earnings, operating income was driven by the growth in net sales for products such as commercial
products with comparatively high margins in the advanced materials sector and the industrial material market, andamounted to 547 million yen, 48.3% up from the same period one year earlier.
2(2) Qualitative Information on Consolidated Financial Position:[Assets, Liabilities, and Net Assets]
Total assets as of the end of the consolidated second quarter under review were 33,196 million yen, down 0.8% or
281 million yen from the end of the previous consolidated fiscal year. This mainly reflected a reduction of 487 million
yen in cash and deposits because of repayments of loans and dividend payments, among other changes, and adecrease of 138 million yen in inventories.
Liabilities were 9,456 million yen, down 4.5% or 446 million yen from the end of the previous consolidated fiscal year,
mainly because of a decrease of 442 million yen in payables and a decrease of 260 million yen in loans.
Net assets stood at 23,740 million yen, 164 million yen or 0.7% up from the end of the previous consolidated fiscal
year. This mainly reflected a 325 million yen increase in retained earnings.
As a result of the above changes, the equity ratio at the end of the consolidated second quarter under review
rose by 1.7 points compared with the end of the previous consolidated fiscal year to 71.5%.
[Cash Flow Status]
Cash and cash equivalents as of the end of the consolidated second quarter under review decreased by 2,387
million yen to 4,783 million yen from the end of the previous consolidated fiscal year. The status of each consolidated
cash flow and their factors during the second quarter are as follows:(Net Cash Provided by (Used in) Operating Activities)
Cash flow used in operating activities was 799 million yen (increase in cash flow used by 247 million yen from thesame consolidated quarter of the previous year). Income before income taxes and minority interests was 1,161 million
yen, and notes and accounts payable-trade decreased by 473 million yen.
(Net Cash Provided by (Used in) Investing Activities)
Net cash used in investing activities was 2,460 million yen (decrease in cash flow used by 702 million yen from thesame consolidated quarter of the previous year), mainly for the disbursements to time deposits and the difference fromrefund of 1,900 million yen.
(Net Cash Provided by (Used in) Financing Activities)
Cash flow used in financing activities was 825 million yen (increase in cash flow used by 472 million yen from thesame consolidated quarter of the previous year), mainly for the payment of cash dividends of 449 million yen.

(3) Qualitative Information on Consolidated Earnings Forecast:
There are no revisions to the consolidated earnings forecast figures for the fiscal year ending in October 2014 thatwere announced in the “Financial Results for the Fiscal Year Ended October 31, 2013 [Japan GAAP] (Consolidated)”released on December 12, 2013.

3

2. Matters Concerning Summary Information (Other)(1) Changes to material subsidiaries during the quarterly consolidated period under review: None
(2) Application of special accounting method in the preparation of quarterly consolidated financial statements: None.
(3) Changes in accounting principles, changes in accounting estimates and retrospective restatements: None.

43. Consolidated Financial Statement(1) Consolidated Quarterly Balance Sheets (Second Quarter)(Thousands of Yen)

End of Previous YearEnd of Second Quarter(October. 31, 2013)(April 30, 2014)

AssetsCurrent Assets
Cash and Deposits

7,171,846

6,683,856

Notes and Accounts Receivable-Trade12,639,632

12,681,710

Merchandise and Finished Goods

3,231,590

3,146,770

Work in Process

888,624757,782

Raw Materials and Supplies

988,780

1,066,418

Deferred Tax Assets

405,172

394,292

Others249,739

235,648-7,053-3,57325,568,332

24,962,906

2,434,925

2,722,924

Accumulated Depreciation-1,479,133-1,494,027

Buildings and Structures, Net

955,791

1,228,896

Machinery, Equipment and Vehicles

3,867,792

3,910,338-3,136,674-3,204,116

731,117706,221920,536

930,335

9,867－-9,538－328－

Construction in progress

2,583,008

2,525,108

Others1,035,492

1,079,349

Accumulated Depreciation-959,869-956,803

Others, Net

75,623

122,546

5,266,406

5,513,108

511,391

500,684

Investment Securities

1,126,177

1,115,014

Guarantee Deposits

251,735

246,653

Deferred Tax Assets

23,45622,484

Others771,667

875,687

Allowance for Doubtful Accounts-41,232-40,251

Total Investments and Other Assets

2,131,805

2,219,588

Total Noncurrent Assets

7,909,602

8,233,381

Total Assets

33,477,935

33,196,287

Allowance for Doubtful Accounts
Total Current Assets
Noncurrent Assets
Property, Plant and Equipment
Buildings and Structures

Accumulated Depreciation
Machinery, Equipment and Vehicles, Net
Land
Lease Assets
Accumulated Depreciation
Lease Assets, Net

Total Property, Plant and Equipment
Intangible Assets
Investments and Other Assets5

(Thousands of Yen)
End of Previous YearEnd of Second Quarter(October. 31, 2013)(April 30, 2014)

Liabilities and Net Assets
Liabilities
Current Liabilities

6,096,703

5,654,446
514,677

Lease Obligations

731,535
775

Accounts Payable-Others

614,544543,942

Income Taxes Payable

32,292

344,792

Advances Received

77,347

218,684

Provision for Bonuses

751,650

699,679

Provision for Directors' Bonuses

35,71325,281

Allowance for Product Warranty

180,198

122,672

Others278,980

245,528

8,799,742

8,369,705

Noncurrent Liabilities
Long-Term Loans Payable

43,668-Provision for Retirement Benefits

47,53854,253

Provision for Directors' Retirement Benefits

18,68018,680

Deferred Tax Liabilities

992,832

1,013,438

Total Noncurrent Liabilities

1,102,719

1,086,372

Total Liabilities

9,902,461

9,456,077

Capital Stock

1,061,210

1,061,210

Capital Surplus

1,483,410

1,483,410

Retained Earnings

20,838,441

21,163,881-363,462-363,591

23,019,599

23,344,909

Valuation and Translation Adjustments
Valuation Difference on Available-for-Sale
Securities
Deferred Gains or Losses on Hedges

211,320

198,044578

168

Foreign Currency Translation Adjustment

121,844

197,086

Total Valuation and Translation Adjustments

333,743

395,300

222,130-

Total Net Assets

23,575,473

23,740,210

Total Liabilities and Net Assets

33,477,935

33,196,287

Notes and Accounts Payable-Trade
Short-Term Loans Payable

Total Current Liabilities-

Net Assets
Shareholders’ Equity

Treasury Stock
Total Shareholders’ Equity

Minority Interests6(2) Consolidated Quarterly Statements of Income & Consolidated Quarterly Statements of Comprehensive
IncomeConsolidated Quarterly Statements of Income (Second Quarter)(Thousands of Yen)
Second Quarter Ended

Second Quarter Ended

April 30, 2013

April 30, 2014

Net Sales

19,370,202

19,957,177

Cost of Sales

15,307,013

15,928,366

4,063,189

4,028,811

3,065,178

3,182,628

998,010846,183

Interest Income

8,912

9,459

Dividends Income

6,751

108,677

Rent Income

4,752

4,820

Foreign Exchange Gains

52,11848,403

Others

27,76425,727

100,300

197,088

6,482

4,795

33

-

Commission Paid

7,987

7,963

Sales Discount

4,384

2,946

Others

3,589

3,074

Total Non-Operating Expenses

22,47818,779Ordinary Income

1,075,832

1,024,492

1,098

-

-

145,132

1,098

145,132

4,412

5,991

-

2,034

4,412

8,026

1,072,517

1,161,597

Income Taxes-Current

252,528

357,290

Income Taxes-Deferred

232,287

37,919484,816

395,210

Income before Minority Interests

587,701

766,387

Minority Interests in Income or Loss (-)-43,922-8,089631,624

774,476

Gross Profit
Selling, General and Administrative Expenses
Operating Income
Non-Operating Income

Total Non-Operating Income
Non-Operating Expenses
Interest Expenses
Loss on Sales of Notes Payable

Extraordinary Income
Gain on Sales of Investment Securities
Gain on Negative Goodwill
Total Extraordinary Income
Extraordinary Losses
Loss Retirement of Noncurrent Assets
Loss on Sales of Noncurrent Assets
Total Extraordinary Losses
Income before Income Taxes and Minority Interests

Total Income Taxes

Net Income (Loss)7

Consolidated Quarterly Statements of Comprehensive Income (Second Quarter)(Thousands of Yen)
Second Quarter Ended

Second Quarter Ended

April 30, 2013

April 30, 2014

587,701

766,387

145,020-13,275

-341

-410

Foreign Currency Translation Adjustment

374,749

86,228

Total Other Comprehensive Income

519,428

72,542Comprehensive Income

1,107,129

838,930(Breakdown)Comprehensive Income attributable to Owners of the
ParentComprehensive Income attributable to Minority Interests

1,087,810

836,033

19,3192,896

Income before Minority Interests
Other Comprehensive Income
Valuation Difference on Available-for-sale Securities
Deferred Gains or Losses on Hedges

8(3) Consolidated Quarterly Statements of Cash Flows(Thousands of Yen)

Net Cash Provided by (Used in) Operating Activities
Income before Income Taxes and Minority Interests
Depreciation and Amortization
Increase (Decrease) in Provision for Bonuses
Increase (Decrease) in Provision for Directors' Bonuses
Increase (Decrease) in Allowance for Product Warranty
Increase (Decrease) in Provision for Retirement Benefits
Increase (Decrease) in Provision for Directors' Retirement Benefits
Increase (Decrease) in Allowance for Doubtful Accounts
Interest and Dividends Income
Interest Expenses
Foreign Exchange Losses (Gains)
Loss (Gain) on Sales of Investment Securities
Gain on Negative Goodwill
Loss (Gain) on Sales of Noncurrent Assets
Loss on Retirement of Noncurrent Assets
Decrease (Increase) in Notes and Accounts Receivable-Trade
Decrease (Increase) in Inventories
Increase (Decrease) in Notes and Accounts Payable-Trade
Increase (Decrease) in Accounts Payable-Others
Increase (Decrease) in Advances Received
Increase (Decrease) in Accrued Consumption Taxes
Others, Net
Sub totalInterests and Dividends Income Received
Interest Expenses Paid
Income Taxes Paid (-) or Returned
Net Cash Provided by (Used in) Operating Activities

9

Second Quarter

Second Quarter

Ended

Ended

April 30, 2013

April 30, 2014

1,072,517

1,161,597

191,319

195,325(443,160)(46,587)
32,137
8,506(10,920)(6,943)(15,664)
6,482(60,570)(1,098)4,412
1,717,146
512,826(1,749,930)(101,310)(22,633)
124,001(84,306)
1,126,224(53,017)(10,431)(57,525)
6,465(4,460)(118,136)
4,795(18,596)(145,132)
2,034
5,991
(7,172)
172,484(473,092)
2,398
140,771(15,659)(119,527)
669,111

14,615

121,295(7,128)(581,409)
552,301(5,219)14,691
799,879

(Thousands of Yen)
Second Quarter

Second Quarter

Ended

Ended

April 30, 2013

April 30, 2014

Net Cash Provided by (Used in) Investing Activities(3,800,000)(4,300,000)

Proceeds from Withdrawal of Time Deposits

700,000

2,400,000

Purchase of Property, Plant and Equipment(105,938)(388,387)

50-

Purchase of Intangible Assets(26,439)(113,726)

Purchase of Investment Securities(61,798)(7,323)

Proceeds from Sales of Investment Securities

7,483

-

Payments of Loans Receivable(2,610)(2,190)

Collection of Loans Receivable

1,847

1,026

Guarantee Deposits (Increase)

127,907

2,248

Others, Net(3,771)(52,469)(3,163,270)(2,460,823)

Net Increase (Decrease) in Short-Term Loans Payable

55,314(238,955)

Repayments of Lease Obligations(4,904)(775)

Repayments of Long-Term Loans(4,210)(56,534)-(79,894)

(68)

(128)

(399,146)(449,037)(353,015)(825,326)

290,250

98,280(2,673,734)(2,387,989)

7,463,174
4,789,440

7,171,846
4,783,856

Deposit of Time Deposits

Proceeds from Sales of Property, Plant and Equipment

Net Cash Provided by (Used in) Investment Activities
Net Cash Provided by (Used in) Financing Activities

Purchase of Stock from Minority Shareholders
Purchase of Treasury Stock
Cash Dividends Paid
Net Cash Provided by (Used in) Financing Activities
Effect of Exchange Rate Change on Cash and Cash Equivalents
Net Increase (Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of Period
Cash and Cash Equivalents at End of Period10(4) Note on Going Concern Assumption
None.
(5) Segment Information, etc.
【Segment Information 】
Second Quarter Ended April 30, 2013
1 Information Pertaining to the Amount of Net sales or Net Loss of Each Reporting Segment(Thousands of Yen)
Reported Segment
Machinery & Equipment
Business

Chemical Products
Business

5,486,848

13,883,353

19,370,202

-

-

-

5,486,848

13,883,353

19,370,202

Net Sales
Net Sales to UnaffiliatedCustomers
Internal Net Sales among
Segments or AmountTransferred
Total

Total

Grand Total

19,370,202-

19,370,202

Segment Profit
629,242368,768
998,010
998,010(Note) The total amount of segment profit is identical to the operating income reported on the Quarter Statements ofConsolidated Income.
Second Quarter Ended April 30, 2014
1 Information Pertaining to the Amount of Net sales or Net Loss of Each Reporting Segment(Thousands of Yen)
Reported Segment
Machinery & Equipment
Business

Chemical Products
Business

5,034,130

14,923,047

19,957,177

19,957,177

-

-

-

-

5,034,130

14,923,047

19,957,177

19,957,177

Net Sales
Net Sales to UnaffiliatedCustomers
Internal Net Sales among
Segments or AmountTransferred
Total

Total

Grand Total

Segment Profit
299,170547,012846,183
846,183(Note) The total amount of segment profit is identical to the operating income reported on the Quarter Statements ofConsolidated Income.
2 Information concerning impairment loss on noncurrent assets, goodwill, and other items by reporting segment(Material gain on negative goodwill)
The Tomoe Engineering Group had a gain on negative goodwill in the Chemical Products Business in conjunction withthe acquisition of the stock of Interstella Co., Ltd., a consolidated subsidiary of Tomoe Engineering, which was owned
by another company. The reported amount of the gain on negative goodwill in the consolidated second quarter underreview as a result of this acquisition was 145,132,000 yen.
(6) Notes for Significant Changes in Shareholder’s Equity
None

11

4. Overseas Net Sales (Supplemental Information)
Second Quarter Ended April 30, 2013

(Thousands of Yen)
Asia

I. Overseas Net Sales

Total

2,419,013

482,720

2,901,734--

19,370,202

12.5

2.5

15.0

II. Consolidated Net Sales
III. Ratio of Overseas Net Sales to Consolidated Net Sales (%)

Other Regions(Notes)1. Areas including countries or regions are determined based on their degree of geographical proximity.
2. Main countries or regions included in the areas:(1) Asia: China, Korea, Taiwan and Indonesia(2) Other regions: America and Europe
3. Overseas net sales are sales of our company and subsidiaries made in countries and regions other than Japan.
Second Quarter Ended April 30, 2014

(Thousands of Yen)
Asia

I. Overseas Net Sales
II. Consolidated Net Sales
III. Ratio of Overseas Net Sales to Consolidated Net Sales (%)

Other Regions

Total

2,677,356

476,629

3,153,985--

19,957,1777

13.4

2.4

15.8

(Notes)1. Areas including countries or regions are determined based on their degree of geographical proximity.
2. Main countries or regions included in the areas:(1) Asia: China, Korea, Taiwan and Indonesia(2) Other regions: America and Europe
3. Overseas net sales are sales of our company and subsidiaries made in countries and regions other than Japan.

12